Microsoft is also capitalizing on its impressive financial standing with a $60 billion share repurchase program. With a liquidity base of $75.5 billion and $45 billion in debt, the company is well-prepared to fund this buyback initiative. Microsoft’s free cash flow for fiscal 2024 stood at $74 billion, driven by the success of Azure and its involvement with OpenAI. This strong cash generation means Microsoft can easily afford its buyback program alongside its $24 billion in annual dividend expenses, offering more value to shareholders.
Moreover, Microsoft’s integration of AI is further enhancing its financial performance. As more companies adopt AI, Microsoft stands to benefit from increased demand, which should bolster its free cash flow and help sustain its share buyback programs. This virtuous cycle of cash flow growth and share repurchases has the potential to elevate Microsoft’s stock price, attracting more investors and creating long-term value. By leveraging its leadership in AI, Microsoft is solidifying its position in the tech and financial markets.
On the other hand, Nvidia has also emerged as a critical player in the AI space, with its revenue skyrocketing from under $30 billion to an estimated $125 billion in its current fiscal year. The company’s dominance in AI computing, driven by its next-generation chip line, Blackwell, has helped it generate substantial free cash flow. Nvidia expects to conclude this fiscal year with more than $60 billion in cash profits. The chart below compares the percentage price change of major tech companies—Microsoft, Nvidia, Google, Meta Platforms, and Amazon from 2014 to 2024. It is found that Nvidia experienced the largest price increase at 38,400%, followed by Amazon at 1,710%, Google at 978.3%, and Microsoft and Meta at 1,380%. This price percentage price change highlights Nvidia’s significant outperformance relative to the other companies over the decade.